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on Regulation |
| By: | Benito Arruñada |
| Abstract: | Demand for law professionals in the conveyancing of property is decreasing because of market and institutional changes. On the market side, many transactions feature large, well-known parties and standardized transactions, which make professionals less effective or necessary for protecting the parties to private contracts. On the institutional side, public titling makes it possible to dispense with a broadening set of their former functions. Recording of deeds made professionals redundant as depositories of deeds and reduced demand for them to design title guarantees. Effective registration of rights increasingly substitutes professionals for detecting title conflicts with third parties and gathering their consent. Market changes undermine the information asymmetry rationale for regulating conveyancing, while institutional changes facilitate liberalizing not only conduct but also license regulations. These arguments are supported here by disentangling the logic of titling systems and presenting empirical evidence from the European and USA markets. |
| Keywords: | Lawyers, notaries, property rights, real estate, transaction costs |
| JEL: | K11 K12 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1034&r=reg |
| By: | Sabel, Charles F.; Zeitlin, Jonathan |
| Abstract: | This paper argues that current widespread characterizations of EU governance as multi-level and networked overlook the emergent architecture of the Union’s public rule making. In this architecture, framework goals (such as full employment, social inclusion, “good water status”, a unified energy grid) and measures for gauging their achievement are established by joint action of the member states and EU institutions. Lower-level units (such as national ministries or regulatory authorities and the actors with whom they collaborate) are given the freedom to advance these ends as they see fit. But in return for this autonomy, they must report regularly on their performance and participate in a peer review in which their results are compared with those pursuing other means to the same general ends. Finally, the framework goals, performance measures, and decision-making procedures themselves are periodically revised by the actors, including new participants whose views come to be seen as indispensable to full and fair deliberation. Though this architecture cannot be read off from neither Treaty provisions nor textbook accounts of the formal competences of EU institutions, the paper traces its emergence and diffusion across a wide range of policy domains, including telecommunications, energy, drug authorization, occupational health and safety, employment promotion, social inclusion, pensions, health care, environmental protection, food safety, maritime safety, financial services, competition policy, state aid, anti-discrimination policy and fundamental rights. |
| Keywords: | governance; regulation; democracy; rule of law; diversity/homogeneity; networks; open coordination; transparency; accountability; agency theory |
| Date: | 2007–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:erp:eurogo:p0014&r=reg |
| By: | Régis Blazy (CREFI-LSF, Luxembourg University, Luxembourg School of Finance, Luxembourg.); Laurent Weill (LARGE, Université Robert Schuman, Institut d'Etudes Politiques, France) |
| Abstract: | This research investigates how bankruptcy law influences the design of debt contracts and the investment choice through the sanction of faulty managers. We model a lending relationship between a small firm and a monopolistic bank which decides the loan rate. The firm may perform asset substitution, which is punished by the Law through legal sanctions. These sanctions are implemented in case of costly bankruptcy only. This way of resolving financial distress can be avoided yet, if a private agreement is achieved. First, – when sanctions are high – we show that costly bankruptcy may be preferred by honest firms over private negotiation. Thus costly bankruptcy cannot be avoided under a severe legal environment. However, as the bank internalizes the rules of default, debt contracts are designed so that this situation never happens at equilibrium (“legal efficiency”).Second, a peculiar legislation may incite banks to accept generalized moral hazard (“economic inefficiency”). Then, the legislator can indectly enforce economic efficiency. However he must consider effects beyond the simple comparison between legal sanctions and bankruptcy costs, and focus on the impact of such legal sanctions on the design of the debt contract. Simulated results show that even small changes of legal sanctions may have drastic effects on the firm’s investment policy. Besides, it appears that extreme severity (i.e. 100% of the manager’s wealth is subject to legal sanctions) is not needed to ensure economic efficiency. Last, in some cases, the legislator may have the choice between several levels of legal sanctions all leading to economic efficiency: when choosing between them, the legislator affects the profit sharing only. |
| Keywords: | Bankruptcy, Credit Lending, Moral Hazard, Sanctions |
| JEL: | G33 D82 D21 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:07-012&r=reg |
| By: | Bobirca, Ana; Miclaus, Paul-Gabriel |
| Abstract: | The purpose of the article is to illustrate the main characteristics of the corporate governance challenge facing the countries of South-Eastern Europe (SEE) and to subsequently determine and assess the extensiveness and effectiveness of corporate governance regulation in these countries. Therefore, we start with an overview on the subject of the key problems of corporate governance in transition. We then address the issue of corporate governance measurement for SEE countries. To this end, we include a review of the methodological framework for determining both the extensiveness and the effectiveness of corporate governance legislation, as defined by the EBRD and a discussion on aspects related to corporate governance development, the quality of corporate governance codes and of the “law on the books”. We then focus on the actual analysis of legal institutions effectiveness and provide a measure of corporate governance in Romania and other SEE emerging markets. The paper concludes by emphasizing the relationship between legal change and the development of financial markets in the SEE region. |
| Keywords: | corporate governance; South-Eastern Europe; transition; extensiveness; effectiveness |
| JEL: | G38 P31 K22 G34 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3272&r=reg |
| By: | Michael Rauscher (University of Rostock and ifo Institut München); Edward B. Barbier (University of Wyoming) |
| Abstract: | The paper combines an economic-geography model of agglomeration and periphery with a model of species diversity and looks at optimal policies of biodiversity conservation. The subject of the paper is "natural" biodiversity, which is inevitably impaired by anthropogenic impact. Thus, the economic and the ecological system compete for space and the question arises as to how this conflict should be resolved. The decisive parameters of the model are related to biological diversity (endemism vs. redundancy of species) and the patterns of economic geography (centrifugal and centripetal forces). As regards the choice of environmental-policy instruments, it is shown that Pigouvian taxes do not always establish the optimal allocation. |
| Keywords: | biodiversity, new economic geography, agglomeration, species redundancy vs. endemism, environmental regulation |
| JEL: | Q56 Q57 Q58 R12 R14 R23 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ros:wpaper:79&r=reg |
| By: | Sven Anders (Department of Rural Economy, University of Alberta Edmonton); Julie Caswell (Department of Resource Economics, University of Massachusetts, Amherst, MA) |
| Abstract: | The United States mandated a Hazard Analysis Critical Control Points (HACCP) food safety standard for seafood in 1997. Panel model results for the period 1990 to 2004 suggest that HACCP introduction had a negative and significant impact on overall seafood imports from the top 33 suppliers. While the effect for developed countries was positive, the negative HACCP effect for developing countries supports the view of “standards-as-barriers” versus ”standards-as-catalysts.” When the effect is analyzed at an individual country level a different perspective emerges. Regardless of development status, leading seafood exporters generally gained sales volume with the U.S., while most other smaller trading partners faced losses or stagnant sales. |
| Keywords: | food standards, international trade, developed and developing countries |
| JEL: | Q18 F14 L51 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:dre:wpaper:2007-7&r=reg |
| By: | Hoffmann, Magnus; Schmidt, Frederik |
| Abstract: | In the following, we examine a market of a digital consumption good with monopolistic supply. In this market, it is the ability of the consumer to bypass (”crack”) the copy-protection of the monopolist which induces a lower price of the digital good, compared to an uncontested monopoly (textbook case). We analyze the complex relationship between the cracking efforts of the consumer, the copy-protection efforts and the pricing decision of the monopolist, and the welfare of the economy. We find, for example, that the monopolist will deter piracy if the (exogenous) relative effectiveness of the consumer’s bypassing activity is low compared to the copy-protection technology. In this case welfare is lower than the welfare in the textbook case. On the contrary, welfare rises above the textbook case level if the relative effectiveness of cracking is sufficiently high. |
| Keywords: | Digital Products; Contests; Security of Property Rights; Endogenous Monopoly Price |
| JEL: | D42 C72 D23 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3289&r=reg |
| By: | Fecht, Falko; Grüner, Hans Peter; Hartmann, Philipp |
| Abstract: | This paper compares four forms of inter-regional financial risk sharing: (i) segmentation, (ii) integration trough the secured interbank market, (ii) integration trough the unsecured interbank market, (iv) integration of retail markets. The secured interbank market is an optimal risk-sharing device when banks report liquidity needs truthfully. It allows diversification without the risk of cross-regional financial contagion. However, free-riding on the liquidity provision in this market restrains the achievable risk-sharing as the number of integrated regions increases. In too large an area this moral hazard problem becomes so severe that either unsecured interbank lending or, ultimately, the penetration of retail markets is preferable. Even though this deeper financial integration entails the risk of contagion it may be beneficial for large economic areas, because it can implement an efficient sharing of idiosyncratic regional shocks. Therefore, the enlargement of a monetary union, for example, extending the common interbank market might increase the benefits of also integrating retail banking markets through cross-border transactions or bank mergers. We discuss these results in the context of the ongoing debate on European financial integration and the removal of bank branching restrictions in the United States during the 1990s, and we derive implications for the relationship between financial integration and financial stability. Last we illustrate the scope for cross-regional risk sharing with data on non-performing loans for the European Union, Switzerland and the United States. |
| Keywords: | cross border lending; financial contagion; financial integration; interbank market |
| JEL: | F36 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6311&r=reg |
| By: | Changmin Lee (Indiana University Bloomington) |
| Abstract: | I analyze directorships held by CEOs who retired during 1989-1993 and during 1998-2002. My results suggest that retired CEOs became more popular on boards. Also, although pre-retirement accounting performance helps explain the number of outside directorships a retired CEO held in the 1989-1993 sample as Brickley, Linck, and Coles (1999) found, it does not in the 1998-2002 sample. Third, a company's stock performance during a CEO's tenure affects whether he became an inside director of that company after retirement. A 25% change in stock price performance increased the probability by 11% in the 1989-1993 sample, and 51% in the 1998-2002 sample. Finally, if a retired CEO worked in a regulated industry, his probability of serving at least one outside directorship fell by 34% in the 1989-1993 sample, and 24% in the 1998-2002 sample. |
| Keywords: | Corporate governance, Board of director, Deregulation |
| JEL: | G34 G38 L10 L51 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:inu:caeprp:2007007&r=reg |
| By: | Stefan Baumgärtner (Centre of Sustainable Management, Leuphana University of Lüneburg); Frank Jöst (Alfred-Weber-Institute of Economics, Universtity of Heidelberg); Ralph Winkler (Center of Economic Research,ETH Swiss Federal Institute of Technology) |
| Abstract: | We analyze the optimal dynamic scale and structure of a two-sector-economy, where each sector produces one consumption good and ons specific pollutant. Both pollutants accumulate at different rates to stocks which damage the natural environment. This acts as a dynamic driving force for the economy. Our analysis shows that along the optimal time-path (i) the overall scale of economic acticity may be less than maximal; (ii) the time sclae economic dynamics (change of scale and structure) is mainly determined by the lifetime of pollutNTS, their harmfulness and the discount rate; and (iii) the optimal control of economic scale and structure may be non-monotonic. These results raise important questions about the optimal design of environmental policies. |
| Keywords: | dynamoic economy-environment interaction, multi-pollutant emissions, non-monotonic control, optimal scale, stock pollution, structural change, time scale |
| JEL: | Q20 O10 O41 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:50&r=reg |